How is the interest expense treated in the SDE calculation? It is a component of the Net Profit Calculation but it seems like this would be different for every business. Is it an add back? thanks
Thanks for the question, David. My understanding is that SDE is equal to net income before taking out taxes, depreciation, compensation to company owners (including benefits), non-recurring costs, and interest expense. For purposes of calculating SDE, you would add back in any interest expenses paid.
Hope this helps.
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